NRI Taxation India

You are liable to pay taxes for just the income (through business or other dealings) earned in India. The Income Tax department classifies an individual to be a non-resident when:

You live outside India for a period of 182 days or more during the relevant previous year.

You are not present in India for 60 days or more during the previous year and again for a combined total of 365 days or more during the previous 4 years prior to the previous year.

Your status of being a resident or an NRI depends on the above criterion. For example, if you are an NRI and were physically present in India for more than 182 days during one financial year, then you will be considered as a resident when it comes to taxes. And you have to pay taxes to the Indian government for the income earned in India for that year.

What can an NRI be taxed on while in India?

As the income earned while living abroad does not come under I-T Act, it would be taxed for the same. All the earnings abroad are out of the tax net as the NRI status is being maintained. But any income or capital gains made in India would come under the tax net in a financial year.

Taxable incomes for NRIs include:

Salary: Income earned in India or received on your behalf is taxable.
Property and assets: Any income or capital gain from the sale, rent or lease of a property or an asset in India will be taxed as per the Income Tax rules.
Securities and Investments: Income or capital gains from long-term or short term investments are liable to be taxed.

As per Income Tax Act,1961 and Foreign Exchange Management Act (FEMA), you qualify to pay taxes in case you fulfil either of the following conditions:

Your taxable income in India during a particular financial year is more than the exemption limit of Rs 2 lakh.

You have earned short-term or long term capital gains from sale of any investment or property, even if the gains are less than the exemption limit.

NRIs cannot file for tax returns under the following circumstances: If taxable income consists of only investment income or long term capital gains and when the tax has already been deducted at source, on such income.